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Oil jumps more than 2% as the market focuses on supply shortages

UNITED STATES (OBSERVATORY) – Oil jumped more than 2 percent on Wednesday recovering from a four-day slump as the central bank expressed caution over plans to increase crude supply and analysts’ expectations of a drop in US oil inventories.

Brent crude ended the session with $ 2.11, or 2.8 percent, at $ 77.50 per barrel. US crude futures rose $ 1.48, or 2.2 percent, to $ 68.21 a barrel.

Oil has come under pressure in previous sessions of reports that the Organization of the Petroleum Exporting Countries (OPEC) and Russia may ease production cuts in force since January 2017. These cuts helped push global stocks down and boosted prices as Brent crude hit a three- $ 80.50 a barrel on May 17th.

On May 15, Reuters sources said Saudi Arabia and Russia were discussing increasing oil production from OPEC member states and independent producers by about 1 million bpd.

But the Russian central bank said on Wednesday that falling oil prices would pose a threat to the country’s financial sector.

Markets are waiting for the latest weekly data on US oil and fuel stocks to be released from the US Petroleum Institute later on Wednesday and from the Energy Information Administration on Thursday. Analysts in a Reuters poll predicted a drop of 525,000 barrels in US crude inventories.